Question

the bank of canada sets the reserve requirement, which banks must meet through deposits at the bank of canada and cash held at the bank. what do these requirements achieve? check all that apply. they help to prevent bank runs by reassuring the public that banks will not make too many loans and run out of cash. they help to facilitate transfers of funds between banks when a customer from one bank writes a cheque to a customer of another. they mean that a bank must have one dollar of deposits for every dollar it lends. they help to control the money supply.

Explanation:

1. For the first option: Reserve requirements ensure banks hold enough cash/reserves, so public is reassured banks won't run out of cash, preventing bank runs. So this is correct.
2. For the second option: When banks have reserves (due to reserve requirements), it's easier to transfer funds between banks for cheque transactions. So this is correct.
3. For the third option: Reserve requirement is a fraction of deposits, not 1:1. So this is incorrect.
4. For the fourth option: By setting reserve requirements, the central bank (Bank of Canada) can control how much banks can lend, thus controlling money supply. So this is correct.

Answer:

• They help to prevent bank runs by reassuring the public that banks will not make too many loans and run out of cash.
• They help to facilitate transfers of funds between banks when a customer from one bank writes a cheque to a customer of another.
• They help to control the money supply.